(Tax Update) E-Invoice & HR: What Every SME Needs to Know

(Tax Update) E-Invoice & HR: What Every SME Needs to Know

Boss : "Eh, HR, do we need e-invoices for staff claims ah?"

HR : "Err… I think so? But maybe not? Let me check."

Finance : "Aiyo, if wrong, kena audit how?"

Tax Agent : "Depends. Got company policy or not?"

HR & Finance (panicking) : "Policy?! What policy??"

Sound familiar? With Malaysia’s e-invoice implementation, HR and Finance teams are suddenly caught in the crossfire of tax compliance. What needs an e-invoice? What doesn’t? And most importantly—how to avoid a tax headache later?

1. No E-Invoice for Salaries

Good news first—employment income is exempt. No e-invoices needed for salaries, bonuses, or wages. That’s one less thing for HR to worry about.

2. Employee Claims: Keep Your Policies Clear

For employee-related expenses like travel, meals, or work-related purchases, e-invoices should ideally be issued in the company’s name. But here’s the catch—if the invoice is under the employee’s name, it can still be accepted as long as:
✅ There’s a clear company policy on claims.
✅ The employee submits the original receipt or e-invoice.

Moral of the story? HR needs to document all benefits and claims policies properly. No "case-by-case" approvals, please.

3. Petrol Expenses: A Special Case

SMEs often struggle with fuel claims. The rule? No need to generate self-billed e-invoices if the employee submits a petrol receipt under their name. However, the expense must be:
✅ Covered under company policy.
✅ Supported by the original e-invoice or receipt.

Translation: No more “Boss, I forgot to take receipt” excuses!

4. Travel Allowances & Medical Insurance

Travel allowances paid outside payroll? No problem—no e-invoice needed if it’s part of official company benefits. Same goes for staff medical insurance, provided everything is properly documented.

5. Director’s Fees: Business or Employment Income?

Now, here’s where it gets tricky. If your director is receiving fees as employment income, no e-invoice is required. But if they’re independent (not on payroll), the company must issue a self-billed e-invoice. Better check your director’s tax status before processing payments!

Final Word: HR, Stay Ahead

HR and Finance must work hand in hand to ensure compliance. E-invoice rules aren’t meant to be a headache—as long as policies are clear, documentation is in order, and claims are processed correctly, it’s business as usual.

So, before the next payday, ask yourself : Are your company’s claims policies e-invoice-ready? If not, it’s time for a quick HR-finance meeting!

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